II 

118TH CONGRESS 

2D SESSION S. 5144 

To amend the Internal Revenue Code of 1986 to provide a tax credit for 

investors in start-up businesses, to provide a credit for wages paid 

by start-up businesses to their first employees, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 24, 2024 

Mr. WYDEN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a tax credit for investors in start-up businesses, to provide a credit for wages paid by start-up businesses to 

their first employees, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Providing Real Oppor5 tunities for Growth to Rising Entrepreneurs for Sustained 

6 Success (PROGRESS) Act’’. 


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1 SEC. 2. SMALL BUSINESS INVESTOR TAX CREDIT. 

2 (a) IN GENERAL.—Subpart D of part IV of sub3 chapter A of chapter 1 of the Internal Revenue Code of 

4 1986 is amended by adding at the end the following new 

5 section: 

6 ‘‘SEC. 45BB. SMALL BUSINESS INVESTOR TAX CREDIT. 

7 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

8 the small business investor credit determined under this 

9 section for any taxable year is an amount equal to the 

10 sum of the credit amounts determined for the taxable year 

11 for all qualified investments of the taxpayer. 

12 ‘‘(b) CREDIT AMOUNT.—For purposes of this sec13 tion— 

14 ‘‘(1) IN GENERAL.—The term ‘credit amount’ 

15 means, with respect to any qualified investment in a 

16 qualifying business entity, the lesser of— 

17 ‘‘(A) 10 percent of the amount of the 

18 qualified investment determined under sub19 section (c)(3) for the taxable year, or 

20 ‘‘(B) an amount equal to— 

21 ‘‘(i) 50 percent of such qualified in22 vestment, reduced (but not below zero) by 

23 ‘‘(ii) the amount of the credit deter24 mined under this section with respect to 

25 such qualified investment of the taxpayer 

26 for all preceding taxable years. 


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1 ‘‘(2) OVERALL DOLLAR LIMITATION.— 

2 ‘‘(A) IN GENERAL.—The credit amount de3 termined under paragraph (1) with respect to 

4 any qualified investment of a taxpayer in a 

5 qualifying business entity for any taxable year 

6 shall not exceed the lesser of— 

7 ‘‘(i) $10,000 (as increased for the tax8 able year by the cost-of-living adjustment 

9 under subsection (e)(2)), or 

10 ‘‘(ii) an amount equal to— 

11 ‘‘(I) an amount equal to 5 times 

12 the amount under clause (i) for the 

13 taxable year, reduced (but not below 

14 zero) by 

15 ‘‘(II) the amount of the credit 

16 determined under this section with re17 spect to such qualified investment of 

18 the taxpayer for all preceding taxable 

19 years. 

20 ‘‘(B) NO CREDIT AMOUNT BY REASON OF

21 COST-OF-LIVING ADJUSTMENT AFTER OVERALL

22 LIMIT FIRST REACHED.—No credit amount 

23 shall be determined under this section with re24 spect to any qualified investment of a taxpayer 

25 in a qualifying business entity for any taxable 


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1 year after the first taxable year for which the 

2 amount determined under subclause (II) of sub3 paragraph (A)(ii) equals or exceeds the amount 

4 determined under subclause (I) of such sub5 paragraph. 

6 ‘‘(3) REDUCTION IN CREDIT AMOUNT WHERE

7 LOAN RATE EXCEEDS PRIME RATE.— 

8 ‘‘(A) IN GENERAL.—If— 

9 ‘‘(i) the rate of interest (expressed as 

10 an annual percentage rate) on a qualified 

11 investment which is a qualifying loan, ex12 ceeds 

13 ‘‘(ii) the bank prime rate as of the 

14 first day of the month in which the loan is 

15 entered into (or such other time as the 

16 Secretary may specify), 

17 then each of the amounts determined under 

18 subparagraphs (A) and (B)(i) of paragraph (1) 

19 shall be reduced (but not below zero) by the 

20 amount which bears the same ratio to such 

21 amount as the number of full percentage points 

22 by which such rate of interest exceeds such 

23 bank prime rate bears to 25. 

24 ‘‘(B) SPECIAL RULES WHERE QUALIFYING

25 LOANS TREATED AS PART OF SINGLE INVESTVerDate Sep 11 2014 00:29 Oct 05, 2024 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S5144.IS S5144

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1 MENT.—If 1 or more qualifying loans to which 

2 subparagraph (A) applies are treated as part of 

3 a single qualified investment under subsection 

4 (c)(1), then, for purposes of this subsection— 

5 ‘‘(i) the credit amount under para6 graph (1) for such single qualified invest7 ment shall be the sum of such credit 

8 amounts computed separately for each 

9 such qualifying loan and such credit 

10 amount computed for all other qualified in11 vestments treated as part of such single 

12 qualified investment, and 

13 ‘‘(ii) the limitation under paragraph 

14 (2) shall be applied to such sum. 

15 ‘‘(C) RULES RELATING TO INTEREST

16 RATES.— 

17 ‘‘(i) ANNUAL PERCENTAGE RATE.— 

18 The Secretary shall prescribe guidance or 

19 regulations for the calculation of the an20 nual percentage rate of interest on a loan 

21 for purposes of subparagraph (A)(i), in22 cluding rules which provide for— 

23 ‘‘(I) the calculation of the annual 

24 percentage rate in cases where there 

25 is a variable rate of interest, 


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1 ‘‘(II) the recalculation of the an2 nual percentage rate where the terms 

3 of the loan are modified after the loan 

4 is entered into, and 

5 ‘‘(III) the proper taking into ac6 count of lump sum payments, orienta7 tion and application fees, closing fees, 

8 invoice discounting fees and any other 

9 loan fees. 

10 ‘‘(ii) BANK PRIME RATE.—For pur11 poses of subparagraph (A)(ii), the term 

12 ‘bank prime rate’ means the average pre13 dominant prime rate quoted by commercial 

14 banks to large businesses, as determined 

15 by the Board of Governors of the Federal 

16 Reserve System. 

17 ‘‘(4) SPECIAL RULES FOR PASS-THRU ENTI18 TIES.—For purposes of this subsection, if a qualified 

19 investment in a qualifying business entity is made by 

20 a partnership, trust, S corporation, or other pass21 thru entity, the limitations under this subsection 

22 shall apply at the entity level. 

23 ‘‘(c) QUALIFIED INVESTMENT.—For purposes of this 

24 section— 


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1 ‘‘(1) IN GENERAL.—The term ‘qualified invest2 ment’ means, with respect to any qualifying business 

3 entity, either of the following of the taxpayer: 

4 ‘‘(A) The direct or indirect acquisition of 

5 stock, or a capital interest, in the entity at its 

6 original issue solely in exchange for cash. 

7 ‘‘(B) A qualifying loan made to the entity. 

8 If a taxpayer has or had more than 1 qualified in9 vestment in any qualifying business entity for the 

10 taxable year or any prior taxable year, all such in11 vestments shall be treated as a single qualified in12 vestment for purposes of applying this section. 

13 ‘‘(2) EXCEPTION FOR INVESTMENTS MADE BY

14 QUALIFIED ACTIVE INVESTORS AND RELATED PER15 SONS.—Such term shall not include any acquisition 

16 or loan made by a taxpayer who, immediately before 

17 the acquisition or loan, is a qualified active investor 

18 in the qualifying business entity or is related to any 

19 qualified active investor. 

20 ‘‘(3) AMOUNT OF QUALIFIED INVESTMENT.— 

21 The amount of a taxpayer’s qualified investment 

22 with respect to any qualifying business entity for 

23 any taxable year shall be the monthly average for 

24 months ending within the taxable year of— 


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1 ‘‘(A) the taxpayer’s aggregate unadjusted 

2 bases in all stock or interests described in para3 graph (1)(A) as of the close of each such 

4 month, and 

5 ‘‘(B) the aggregate outstanding principal 

6 amount of all qualified loans described in para7 graph (1)(B) as of the close of each such 

8 month. 

9 ‘‘(4) SPECIAL RULES FOR TRANSFERS OF

10 QUALIFYING LOANS.— 

11 ‘‘(A) IN GENERAL.—If a taxpayer sells, ex12 changes, or otherwise transfers all or any por13 tion of a qualifying loan which is a qualified in14 vestment in a qualifying business entity, such 

15 investment shall be treated as a qualified in16 vestment in the hands of the transferee (and 

17 not of the transferor) for periods after the 

18 transfer. This paragraph shall also apply to any 

19 subsequent transfer of such interest. 

20 ‘‘(B) COORDINATION OF LIMITS.—In ap21 plying subsection (b) to any qualifying loan 

22 treated as a qualified investment of a transferee 

23 under this paragraph— 

24 ‘‘(i) all credits determined under this 

25 section for any periods before the transfer 


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1 with respect to the qualified investment of 

2 any prior holder of such investment shall 

3 be taken into account under paragraphs 

4 (1)(B)(ii) and (2)(A)(ii)(II) of such sub5 section in the same manner as if such 

6 credits were determined for the transferee 

7 for prior taxable years, and 

8 ‘‘(ii) if only a portion of the qualified 

9 investment was transferred, the amount 

10 taken into account under such paragraphs 

11 by reason of clause (i) shall be ratably re12 duced to reflect only the portion so trans13 ferred. 

14 ‘‘(d) QUALIFYING BUSINESS ENTITY.—For purposes 

15 of this section— 

16 ‘‘(1) DEFINITION.— 

17 ‘‘(A) IN GENERAL.—The term ‘qualifying 

18 business entity’ means, with respect to any 

19 qualified investment, any entity which is en20 gaged in 1 or more trades or businesses and 

21 with respect to which— 

22 ‘‘(i) the qualified active investor own23 ership requirements of paragraph (2) are 

24 met immediately before and after the 

25 qualified investment, 


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1 ‘‘(ii) the wage requirements of para2 graph (3) are met, and 

3 ‘‘(iii) the certification requirements of 

4 paragraph (4) are met. 

5 ‘‘(B) ENTITIES UNDER COMMON CON6 TROL.—For purposes of this section, all quali7 fying business entities treated as a single em8 ployer under subsection (a) or (b) of section 52 

9 or subsection (m) or (o) of section 414 shall be 

10 treated as a single qualifying business entity. 

11 ‘‘(2) QUALIFIED ACTIVE INVESTOR OWNERSHIP

12 REQUIREMENTS.—The requirements of this para13 graph are met with respect to any entity if qualified 

14 active investors own directly or indirectly— 

15 ‘‘(A) in the case of a corporation, more 

16 than 50 percent (by vote and value) of the 

17 stock in the corporation, and 

18 ‘‘(B) in the case of any other entity, more 

19 than 50 percent of the capital or profits inter20 ests in the entity. 

21 ‘‘(3) WAGE REQUIREMENTS.— 

22 ‘‘(A) IN GENERAL.—The requirements of 

23 this paragraph are met with respect to any enti24 ty if the entity, during the taxable year of the 


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1 entity preceding the taxable year in which the 

2 qualified investment is made— 

3 ‘‘(i) employed at least 1 full-time em4 ployee, or employees constituting a full5 time equivalent employee, in 1 or more 

6 trades or businesses of the entity, and 

7 ‘‘(ii) paid W-2 wages to such employee 

8 or employees with respect to such employ9 ment. 

10 ‘‘(B) CERTAIN WAGES NOT TAKEN INTO

11 ACCOUNT.—W-2 wages shall not be taken into 

12 account under subparagraph (A) if paid by an 

13 entity to an employee, and such employee shall 

14 not be taken into account under subparagraph 

15 (A)(i), during any period the employee is— 

16 ‘‘(i) a qualified active investor, or 

17 ‘‘(ii) an employee other than a quali18 fied active investor who is a 5-percent 

19 owner (as defined in section 

20 416(i)(1)(B)(i)) of the entity. 

21 ‘‘(C) W-2 WAGES.—The term ‘W-2 wages’ 

22 means, with respect to any entity, the amounts 

23 described in paragraphs (3) and (8) of section 

24 6051(a) paid by the entity with respect to em25 ployment of employees by the entity. 


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1 ‘‘(D) FULL-TIME EMPLOYEES AND

2 EQUIVALENTS.—For purposes of this para3 graph— 

4 ‘‘(i) the term ‘full-time employee’ has 

5 the meaning given to such term by section 

6 4980H(c)(4), and 

7 ‘‘(ii) the determination of the number 

8 of employees constituting a full-time equiv9 alent shall be made in the same manner as 

10 under section 4980H(c)(2)(E). 

11 ‘‘(4) CERTIFICATION REQUIREMENTS.— 

12 ‘‘(A) IN GENERAL.—The requirements of 

13 this paragraph are met with respect to any enti14 ty if the entity certifies, in such form and man15 ner and at such time as the Secretary may pre16 scribe, that, at the time of the qualified invest17 ment, the entity— 

18 ‘‘(i) is engaged in 1 or more trades or 

19 businesses, and 

20 ‘‘(ii) meets the requirements of para21 graphs (2) and (3) to be treated as a 

22 qualifying business entity. 

23 ‘‘(B) CERTIFICATION PROVIDED TO INVES24 TORS AND SECRETARY.—An entity shall— 


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1 ‘‘(i) provide the certification under 

2 subparagraph (A) to the person making 

3 the qualified investment at the time such 

4 investment is made, and 

5 ‘‘(ii) include such certification, and 

6 the names, addresses, and taxpayer identi7 fication numbers of the entity’s qualified 

8 active investors and the persons making 

9 the qualified investment, with its return of 

10 tax for the taxable year which includes the 

11 date of the qualified investment. 

12 ‘‘(C) CERTIFICATION INCLUDED WITH RE13 TURN CLAIMING CREDIT.—No credit shall be 

14 determined under subsection (a) with respect to 

15 any taxpayer making a qualified investment in 

16 a qualifying business entity unless the taxpayer 

17 includes the certification under subparagraph 

18 (A) with respect to the investment with its re19 turn of tax for any taxable year for which such 

20 credit is being claimed. 

21 ‘‘(D) TIMELY FILED RETURN REQUIRED.— 

22 The requirements of subparagraph (B)(ii) or 

23 (C) shall be treated as met only if the return 

24 described in such subparagraph is filed on or 

25 before its due date (including extensions). 


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1 ‘‘(5) QUALIFIED ACTIVE INVESTOR.— 

2 ‘‘(A) IN GENERAL.—The term ‘qualified 

3 active investor’ means, with respect to any enti4 ty, an individual who— 

5 ‘‘(i) is a citizen or resident of the 

6 United States, 

7 ‘‘(ii) materially participates (within 

8 the meaning of section 469(h)) in 1 or 

9 more trades or businesses of the entity, 

10 ‘‘(iii) holds stock, or a capital or prof11 its interest, in the entity, and 

12 ‘‘(iv) meets the income requirements 

13 of subparagraph (B). 

14 ‘‘(B) INCOME REQUIREMENTS.—The re15 quirements of this subparagraph are met with 

16 respect to an individual if the average annual 

17 adjusted taxable income of the individual for 

18 the 3 taxable years of the individual imme19 diately preceding the taxable year in which the 

20 qualified investment is made does not exceed 

21 the applicable amount. 

22 ‘‘(C) APPLICABLE AMOUNT.—For purposes 

23 of this paragraph, the term ‘applicable amount’ 

24 means, with respect to any taxable year in 

25 which a qualified investment is made— 


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1 ‘‘(i) in the case of an individual not 

2 described in clause (ii), $100,000 (as in3 creased for the taxable year by the cost-of4 living adjustment under subsection (e)(2)), 

5 and 

6 ‘‘(ii) in the case of an individual who 

7 is a married individual filing a joint return 

8 or who is a head of household (as defined 

9 in section 2(b)) for the taxable year, an 

10 amount equal to 2 times the amount in ef11 fect under clause (i) for the taxable year. 

12 ‘‘(D) RULES FOR DETERMINING AVERAGE

13 TAXABLE INCOME.—For purposes of this para14 graph— 

15 ‘‘(i) a married individual filing a sepa16 rate return of tax for any taxable year 

17 shall include the adjusted taxable income 

18 of their spouse in computing the individ19 ual’s average adjusted taxable income for 

20 any period unless the Secretary determines 

21 that the spouse’s information is not avail22 able to the individual, and 

23 ‘‘(ii) the Secretary shall prescribe 

24 rules for the determination of average ad25 justed taxable income in cases where the 


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1 individual had different filing statuses for 

2 the 3 taxable years described in subpara3 graph (B). 

4 ‘‘(E) ADJUSTED TAXABLE INCOME.—The 

5 term ‘adjusted taxable income’ means taxable 

6 income computed without regard to the deduc7 tions under sections 172 and 199A. 

8 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur9 poses of this section— 

10 ‘‘(1) RELATED PERSONS.—A person shall be 

11 treated as related to another person if the person 

12 bears a relationship to such other person described 

13 in section 267(b), except that section 267(b) shall be 

14 applied by substituting ‘5 percent’ for ‘50 percent’ 

15 each place it appears. 

16 ‘‘(2) COST-OF-LIVING ADJUSTMENTS.—In the 

17 case of any taxable year beginning after 2025, the 

18 $10,000 amount under subsection (b)(2)(A)(i) and 

19 the $100,000 amount under subsection (d)(5)(C)(i) 

20 shall each be increased by an amount equal to— 

21 ‘‘(A) such dollar amount, multiplied by 

22 ‘‘(B) the cost-of-living adjustment under 

23 section 1(f)(3) for the calendar year in which 

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1 stituting ‘2024’ for ‘2016’ in subparagraph 

2 (A)(ii) thereof. 

3 If any increase in such $10,000 amount is not a 

4 multiple of $100, such increase shall be rounded to 

5 the next lowest multiple of $100 and if any increase 

6 in such $100,000 amount is not a multiple of 

7 $1,000, such increase shall be rounded to the next 

8 lowest multiple of $1,000. 

9 ‘‘(3) RULES RELATING TO ENTITIES.— 

10 ‘‘(A) SOLE PROPRIETORSHIPS.—If a tax11 payer carries on 1 or more trades or businesses 

12 as sole proprietorships, all such trades or busi13 nesses shall be treated as a single entity for 

14 purposes of applying this section. 

15 ‘‘(B) APPLICATION TO DISREGARDED EN16 TITIES.—In the case of any entity with a single 

17 owner which is disregarded as an entity sepa18 rate from its owner for purposes of this title, 

19 this section shall be applied in the same manner 

20 as if such entity were a corporation. 

21 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

22 such regulations or other guidance as may be necessary 

23 to carry out the provisions of this section.’’. 

24 (b) CREDIT TO BE PART OF GENERAL BUSINESS

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1 ing ‘‘plus’’ at the end of paragraph (40), by striking the 

2 period at the end of paragraph (41) and inserting ‘‘, plus’’, 

3 and by adding at the end the following new paragraph: 

4 ‘‘(42) the small business investor credit deter5 mined under section 45BB(a).’’. 

6 (c) CREDIT ALLOWED AGAINST ALTERNATIVE MIN7 IMUM TAX.—Section 38(c)(4)(B) of such Code is amended 

8 by redesignating clauses (x), (xi), and (xii) as clauses (xi), 

9 (xii), and (xiii), respectively, and by inserting after clause 

10 (ix) the following new clause: 

11 ‘‘(x) the credit determined under sec12 tion 45BB,’’. 

13 (d) CLERICAL AMENDMENT.—The table of sections 

14 for subpart D of part IV of subchapter A of chapter 1 

15 of such Code is amended by adding at the end the fol16 lowing new item: 

‘‘Sec. 45BB. Small business investor tax credit.’’. 

17 (e) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to qualified investments made in 

19 taxable years beginning after December 31, 2024. 

20 SEC. 3. FIRST EMPLOYEE BUSINESS WAGE CREDIT. 

21 (a) ALLOWANCE OF CREDIT.— 

22 (1) IN GENERAL.—Subpart D of part IV of 

23 subchapter A of chapter 1 of the Internal Revenue 

24 Code of 1986, as amended by section 2, is amended 

25 by adding at the end the following new section: 


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1 ‘‘SEC. 45CC. FIRST EMPLOYEE BUSINESS WAGE CREDIT. 

2 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

3 in the case of a qualifying business entity, the first em4 ployee business wage credit determined under this section 

5 for any taxable year is an amount equal to 25 percent 

6 of the qualified wages of the entity for the taxable year. 

7 ‘‘(b) DOLLAR LIMITATIONS.— 

8 ‘‘(1) IN GENERAL.—The amount of the credit 

9 determined under subsection (a) with respect to any 

10 qualifying business entity for any taxable year shall 

11 not exceed the lesser of— 

12 ‘‘(A) $10,000 (as increased for the taxable 

13 year by the cost-of-living adjustment under sub14 section (f)), or 

15 ‘‘(B) the excess (if any) of— 

16 ‘‘(i) an amount equal to 4 times the 

17 amount under subparagraph (A) for the 

18 taxable year, over 

19 ‘‘(ii) the amount of the credit deter20 mined under this section with respect to 

21 such entity for all preceding taxable years. 

22 ‘‘(2) NO CREDIT BY REASON OF COST-OF-LIV23 ING ADJUSTMENT AFTER OVERALL LIMIT FIRST

24 REACHED.—No credit shall be determined under this 

25 section with respect to any qualifying business entity 

26 for any taxable year after the first taxable year for 


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1 which the amount determined under clause (ii) of 

2 paragraph (1)(B) equals or exceeds the amount de3 termined under clause (i) of such paragraph. 

4 ‘‘(3) PASS-THRU ENTITIES.—If a qualifying 

5 business entity is a partnership, trust, S corporation, 

6 or other pass-thru entity, the limitations under this 

7 subsection shall apply at the entity level. 

8 ‘‘(c) QUALIFIED WAGES.—For purposes of this sec9 tion— 

10 ‘‘(1) IN GENERAL.—The term ‘qualified wages’ 

11 means, with respect to any qualifying business enti12 ty, the amount of W-2 wages paid or incurred dur13 ing any eligible taxable year to employees for serv14 ices performed in connection with a trade or busi15 ness of the entity. 

16 ‘‘(2) EXCEPTION FOR QUALIFIED ACTIVE IN17 VESTORS AND 5-PERCENT OWNER-EMPLOYEES.—W18 2 wages shall not be taken into account under para19 graph (1) if paid by an entity to an employee, and 

20 such employee shall not be taken into account under 

21 paragraph (3)(A), during any period the employee 

22 is— 

23 ‘‘(A) a qualified active investor, or 


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1 ‘‘(B) an employee other than a qualified 

2 active investor who is a 5-percent owner (as de3 fined in section 416(i)(1)(B)(i)) of the entity. 

4 ‘‘(3) ELIGIBLE TAXABLE YEAR.— 

5 ‘‘(A) IN GENERAL.—The term ‘eligible tax6 able year’ means any taxable year of a quali7 fying business entity— 

8 ‘‘(i) which occurs during the period— 

9 ‘‘(I) beginning with the first tax10 able year of the entity in which the 

11 entity employed at least 1 full-time 

12 employee (or employees constituting a 

13 full-time equivalent employee) in 1 or 

14 more trades or businesses of the enti15 ty during the taxable year and paid 

16 W-2 wages to such employee or em17 ployees with respect to such employ18 ment, and 

19 ‘‘(II) ending with the last taxable 

20 year for which a credit may be deter21 mined for the entity under this section 

22 by reason of the limitation under sub23 section (b)(2), and 

24 ‘‘(ii) in the case of a taxable year 

25 other than the first taxable year described 


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1 in clause (i)(I), with respect to which the 

2 entity meets the employment and wage re3 quirements of such clause. 

4 Such term shall not include any taxable year 

5 during such a period if the first taxable year 

6 described in clause (i)(I) of the entity (or any 

7 predecessor) begins before January 1, 2024. 

8 ‘‘(B) W-2 WAGES; FULL-TIME EMPLOY9 EES.—For purposes of this subsection, W-2 

10 wages, full-time employees, and full-time em11 ployee equivalents shall be determined in the 

12 same manner as under section 45BB. 

13 ‘‘(d) QUALIFYING BUSINESS ENTITY.—For purposes 

14 of this section— 

15 ‘‘(1) QUALIFYING BUSINESS ENTITY DE16 FINED.— 

17 ‘‘(A) IN GENERAL.—The term ‘qualifying 

18 business entity’ means, with respect to any tax19 able year for which a credit under this section 

20 is being determined, any entity— 

21 ‘‘(i) which is engaged in 1 or more 

22 trades or businesses, 

23 ‘‘(ii) with respect to which the quali24 fied active investor ownership requirements 

25 of paragraph (2) of section 45BB(d) are 


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1 met as of the close of such taxable year 

2 (rather than immediately before and after 

3 the qualified investment), and 

4 ‘‘(iii) with respect to which the certifi5 cation requirements of paragraph (2) are 

6 met. 

7 ‘‘(B) ENTITIES UNDER COMMON CON8 TROL.—For purposes of this section— 

9 ‘‘(i) IN GENERAL.—All qualifying 

10 business entities treated as a single em11 ployer under subsection (a) or (b) of sec12 tion 52 or subsection (m) or (o) of section 

13 414 shall be treated as a single qualifying 

14 business entity. 

15 ‘‘(ii) ALLOCATION OF CREDIT.—Ex16 cept as provided in regulations, the credit 

17 under this section shall be allocated among 

18 the entities comprising the single entity de19 scribed in clause (i) in proportion to the 

20 qualified wages of each such entity taken 

21 into account under subsection (a). 

22 ‘‘(2) CERTIFICATION REQUIREMENTS.— 

23 ‘‘(A) IN GENERAL.—The requirements of 

24 this paragraph are met with respect to any enti25 ty for any taxable year described in paragraph 


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1 (1) if the entity certifies, in such form and 

2 manner and at such time as the Secretary may 

3 prescribe, that the entity meets the require4 ments described in clauses (i) and (ii) of para5 graph (1)(A). 

6 ‘‘(B) CERTIFICATION PROVIDED TO SEC7 RETARY.—An entity shall include the certifi8 cation under subparagraph (A), and the names, 

9 addresses, and taxpayer identification numbers 

10 of the entity’s qualified active investors (and 

11 employees who are 5-percent owners described 

12 in subsection (c)(2)(B)), with its return of tax 

13 for the taxable year to which the certification 

14 relates. The requirement of this subparagraph 

15 is met only if such return is filed before its due 

16 date (including extensions). 

17 ‘‘(3) QUALIFIED ACTIVE INVESTOR.—For pur18 poses of this section (including applying the require19 ments of paragraph (2) of section 45BB(d) for pur20 poses of paragraph (1)(A)(ii)), the term ‘qualified 

21 active investor’ has the same meaning given such 

22 term by section 45BB(d)(5), except that such sec23 tion shall be applied separately for each taxable year 

24 described in paragraph (1) (rather than the taxable 

25 year of the qualified investment). 


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1 ‘‘(e) ELECTION TO APPLY CREDIT AGAINST PAY2 ROLL TAXES.— 

3 ‘‘(1) IN GENERAL.—At the election of a quali4 fying business entity, section 3111(g) shall apply to 

5 the payroll tax credit portion of the credit otherwise 

6 determined under subsection (a) for the taxable year 

7 and such portion shall not be treated (other than for 

8 purposes of section 280C) as a credit determined 

9 under subsection (a). 

10 ‘‘(2) PAYROLL TAX CREDIT PORTION.—For 

11 purposes of this subsection, the payroll tax credit 

12 portion of the credit determined under subsection 

13 (a) with respect to any qualifying business entity for 

14 any taxable year is the least of— 

15 ‘‘(A) the amount specified in the election 

16 made under this subsection, 

17 ‘‘(B) the credit determined under sub18 section (a) for the taxable year (determined be19 fore the application of this subsection), or 

20 ‘‘(C) in the case of a qualifying business 

21 entity other than a partnership, estate, S cor22 poration or other pass-thru entity, the amount 

23 of the business credit carryforward under sec24 tion 39 carried from the taxable year (deterVerDate Sep 11 2014 00:29 Oct 05, 2024 Jkt 059200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S5144.IS S5144

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•S 5144 IS

1 mined before the application of this subsection 

2 to the taxable year). 

3 ‘‘(3) ELECTION.— 

4 ‘‘(A) IN GENERAL.—Any election under 

5 this subsection for any taxable year— 

6 ‘‘(i) shall specify the amount of the 

7 credit to which such election applies, 

8 ‘‘(ii) shall be made on or before the 

9 due date (including extensions) of the re10 turn for the taxable year, and 

11 ‘‘(iii) may be revoked only with the 

12 consent of the Secretary. 

13 ‘‘(B) SPECIAL RULE FOR PASS-THRU ENTI14 TIES.—In the case of a partnership, estate, S 

15 corporation, or other pass-thru entity, the elec16 tion made under this subsection shall be made 

17 at the entity level. 

18 ‘‘(f) COST-OF-LIVING ADJUSTMENTS.—In the case of 

19 any taxable year beginning after 2025, the $10,000 

20 amount under subsection (b)(1)(A) shall be increased by 

21 an amount equal to— 

22 ‘‘(1) such dollar amount, multiplied by 

23 ‘‘(2) the cost-of-living adjustment under section 

24 1(f)(3) for the calendar year in which the taxable 


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•S 5144 IS

1 year begins, determined by substituting ‘2024’ for 

2 ‘2016’ in subparagraph (A)(ii) thereof. 

3 If any increase in such amount is not a multiple of $100, 

4 such increase shall be rounded to the next lowest multiple 

5 of $100. 

6 ‘‘(g) OTHER RULES.—For purposes of this section— 

7 ‘‘(1) RULES RELATING TO ENTITIES.—Rules 

8 similar to the rules of section 45BB(e)(3) shall 

9 apply. 

10 ‘‘(2) ELECTION NOT TO HAVE CREDIT APPLY.— 

11 ‘‘(A) IN GENERAL.—A taxpayer may elect 

12 not to have this section apply for any taxable 

13 year. 

14 ‘‘(B) OTHER RULES.—Rules similar to the 

15 rules of paragraphs (2) and (3) of section 51(j) 

16 shall apply for purposes of this paragraph. 

17 ‘‘(3) CERTAIN OTHER RULES MADE APPLICA18 BLE.—Rules similar to the rules of subsections (c), 

19 (d), and (e) of section 52 shall apply. 

20 ‘‘(h) REGULATIONS.—The Secretary shall prescribe 

21 such regulations or other guidance as may be necessary 

22 to carry out the provisions of this section, including regu23 lations— 

24 ‘‘(1) preventing the avoidance of the limitations 

25 under this section in cases in which there is a sucVerDate Sep 11 2014 00:29 Oct 05, 2024 Jkt 059200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S5144.IS S5144

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1 cessor or new qualified business entity with respect 

2 to the same trade or business for which a prede3 cessor qualified business entity already claimed the 

4 credit under this section, 

5 ‘‘(2) to minimize compliance and recordkeeping 

6 burdens under the provisions of this section, and 

7 ‘‘(3) for recapturing the benefit of credits deter8 mined under section 3111(g) in cases where there is 

9 a recapture or a subsequent adjustment to the pay10 roll tax credit portion of the credit determined under 

11 subsection (a), including requiring amended income 

12 tax returns in the cases where there is such an ad13 justment.’’. 

14 (2) CREDIT TO BE PART OF GENERAL BUSI15 NESS CREDIT.—Section 38(b) of such Code, as 

16 amended by section 2, is amended by striking ‘‘plus’’ 

17 at the end of paragraph (41), by striking the period 

18 at the end of paragraph (42) and inserting ‘‘, plus’’, 

19 and by adding at the end the following new para20 graph: 

21 ‘‘(43) the first employee business wage credit 

22 determined under section 45CC(a).’’. 

23 (3) CREDIT ALLOWED AGAINST ALTERNATIVE

24 MINIMUM TAX.—Section 38(c)(4)(B) of such Code, 

25 as amended by section 2, is amended by redesigVerDate Sep 11 2014 00:29 Oct 05, 2024 Jkt 059200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\S5144.IS S5144

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•S 5144 IS

1 nating clauses (xi), (xii), and (xiii) as clauses (xii), 

2 (xiii), and (xiv), respectively, and by inserting after 

3 clause (x) the following new clause: 

4 ‘‘(xi) the credit determined under sec5 tion 45CC,’’. 

6 (4) CLERICAL AMENDMENT.—The table of sec7 tions for subpart D of part IV of subchapter A of 

8 chapter 1 of such Code, as amended by section 2, is 

9 amended by adding at the end the following new 

10 item: 

‘‘Sec. 45CC. First employee business wage credit.’’. 

11 (b) PAYROLL TAX CREDIT.—Section 3111 of the In12 ternal Revenue Code of 1986 is amended by adding at the 

13 end the following new subsection: 

14 ‘‘(g) CREDIT FOR FIRST EMPLOYEE BUSINESS WAGE

15 EXPENSES.— 

16 ‘‘(1) IN GENERAL.—In the case of a taxpayer 

17 who has made an election under section 45CC(e) for 

18 a taxable year, there shall be allowed as a credit 

19 against the tax imposed by subsection (a) for the 

20 first calendar quarter which begins after the date on 

21 which the taxpayer files the return for the taxable 

22 year an amount equal to the payroll tax credit por23 tion determined under section 45CC(e)(2). 

24 ‘‘(2) LIMITATION.—The credit allowed by para25 graph (1) shall not exceed the tax imposed by subVerDate Sep 11 2014 00:29 Oct 05, 2024 Jkt 059200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S5144.IS S5144

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1 section (a) for any calendar quarter on the wages 

2 paid with respect to the employment of all individ3 uals in the employ of the employer. 

4 ‘‘(3) CARRYOVER OF UNUSED CREDIT.—If the 

5 amount of the credit under paragraph (1) exceeds 

6 the limitation of paragraph (2) for any calendar 

7 quarter, such excess shall be carried to the suc8 ceeding calendar quarter and allowed as a credit 

9 under paragraph (1) for such quarter. 

10 ‘‘(4) DEDUCTION ALLOWED FOR CREDITED

11 AMOUNTS.—Notwithstanding section 280C(a), the 

12 credit allowed under paragraph (1) shall not be 

13 taken into account for purposes of determining the 

14 amount of any deduction allowed under chapter 1 

15 for taxes imposed under subsection (a).’’. 

16 (c) COORDINATION WITH DEDUCTIONS AND OTHER

17 CREDITS.— 

18 (1) DEDUCTIONS.—Section 280C(a) of the In19 ternal Revenue Code of 1986 is amended by insert20 ing ‘‘45CC(a),’’ after ‘‘45S(a),’’. 

21 (2) OTHER CREDITS.— 

22 (A) Section 41(b)(2)(D) of such Code is 

23 amended by adding at the end the following: 

24 ‘‘(iv) EXCLUSION FOR WAGES TO

25 WHICH FIRST EMPLOYEE WAGE CREDIT


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1 APPLIES.—The term ‘wages’ shall not in2 clude any amount taken into account in 

3 determining the credit under section 

4 45CC.’’. 

5 (B) Section 45A(b)(1) of such Code is 

6 amended by adding at the end the following: 

7 ‘‘(C) COORDINATION WITH FIRST EM8 PLOYEE WAGE CREDIT.—The term ‘qualified 

9 wages’ shall not include wages if any portion of 

10 such wages is taken into account in determining 

11 the credit under section 45CC.’’. 

12 (C) Section 1396(c)(3) of such Code is 

13 amended— 

14 (i) by striking ‘‘section 51’’ each place 

15 it appears and inserting ‘‘section 45CC or 

16 51’’, and 

17 (ii) by inserting ‘‘AND FIRST EM18 PLOYEE WAGE’’ after ‘‘OPPORTUNITY’’ in 

19 the heading thereof. 

20 (d) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years beginning after 

22 December 31, 2024. 

Æ 


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